Norsk Optronics, ALS, of Bergen, Norway, had a current ratio of 2.5 on June 30 of the current year. Onthat date, the company’s assets were:Cash ..................................................... Kr 90,000Accounts receivable, net ...................... 260,000Inventory ............................................... 490,000Prepaid expenses ................................. 10,000Plant and equipment, net ...................... 800,000Total assets .......................................... Kr1,650,000The Norwegian currency is the krone, denoted here by the symbol Kr.Required:1. What was the company’s working capital on June 30?2. What was the company’s acid-test ratio on June 30?3. The company paid an account payable of Kr40,000 immediately after June 30.a. What effect did this transaction have on working capital? Show computations.b. What effect did this transaction have on the current ratio? Show computations.
Norsk Optronics, ALS, of Bergen, Norway, had a
that date, the company’s assets were:
Cash ..................................................... Kr 90,000
Accounts receivable, net ...................... 260,000
Inventory ............................................... 490,000
Prepaid expenses ................................. 10,000
Plant and equipment, net ...................... 800,000
Total assets .......................................... Kr1,650,000
The Norwegian currency is the krone, denoted here by the symbol Kr.
Required:
1. What was the company’s
2. What was the company’s acid-test ratio on June 30?
3. The company paid an account payable of Kr40,000 immediately after June 30.
a. What effect did this transaction have on working capital? Show computations.
b. What effect did this transaction have on the current ratio? Show computations.
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